SUNCHEON/INCHEON South Korea (Reuters) - South Korea's most wanted man, whose heavily decomposed body was found in an orchard last month, had evaded arrest by hiding behind an upstairs wall of a wooden cabin, with suitcases of cash at hand, prosecutors said on Wednesday.

The body of Yoo Byung-un, 73, wanted in connection with the sinking of a ferry in April, was only identified this week, more than a month after he was found lying next to a copy of a book he had written, empty bottles of alcohol nearby, ending the country's biggest and most dramatic manhunt.

"We did all we could to find Yoo and are devastated we couldn't find him alive," Kim Hoe-jong, a senior prosecutor, told a media briefing in Incheon, the city west of Seoul where the ferry began its last voyage.

For two months, wanted posters offering a reward for Yoo's capture faded under the summer sun or disintegrated in the rain while thousands of police combed the country looking for a man who co-founded a church, held an exhibition of photographs at the Louvre in Paris and did jail time for fraud.

On June 12, the same day farmer Park Yoon-seok found Yoo's body in his plum orchard, thousands of police and prosecutors were busy raiding Yoo's sprawling religious compound 215 km away, going as far as searching for tunnels with mechanical diggers.

Yoo headed the family that owned the company that operated the Sewol, a ferry that capsized on April 16 on a journey to the holiday island of Jeju, killing about 300 people, most of them schoolchildren, and triggering an outpouring of grief across the country.

KITCHEN-SINK DRAMA

At the modest but well-appointed, two-storey cabin on the outskirts of Suncheon where Yoo had holed up, its entrance cordoned off by police tape, plates and other tableware could still be seen piled up beside the kitchen sink.

Bags of clothes lay on the floor next to a washing machine, and bibles and a calendar still open to the month of May were visible through a window.

Police raided the cabin, called "Memory in Wood", on May 25 but failed to find the multi-millionaire, who had hidden behind a wooden wall.

When they returned last month, acting on testimony given by an assistant, police found two suitcases that between them contained 830 million won ($810,800) and $160,000, tagged with numbers 4 and 5, prosecutors said, suggesting more cash may have been stashed elsewhere.

It was not clear how, or when, the health-obsessed Yoo traveled the two kilometers to where his body was found nearly three weeks later between orchard saplings, clad in an expensive winter coat and beside a bag containing the alcohol bottles, a change of clothes and a pack of plums.

There was also the book, "Greater Love has No One Than This", written in 1995 while Yoo was serving four years in prison for fraud, and an empty bottle of a shark-liver-oil health tonic, made by a Yoo family company.

'POLICE WERE CHASING A GHOST'

Prosecutors say Yoo had been helped during his flight by a network of members of the church he co-founded, now called the Evangelical Baptist Church. The church has denied the allegations.

The ferry disaster triggered outrage across the country - especially when video footage emerged of crew members abandoning ship while the children stayed in their cabins as instructed.

The Sewol's 15 surviving crew members, including the captain, are on trial on charges ranging from negligence to homicide. Wanted on charges of embezzlement, negligence and tax evasion, Yoo had managed to elude the country's largest manhunt in what had become a political headache for President Park Geun-hye, whose government came under heavy criticism for its handling of the disaster. On Tuesday, Suncheon's police chief said the body in the orchard had been identified with DNA and fingerprint evidence as Yoo. He was sacked the same day over his handling of the case.

Authorities had offered a reward equivalent to nearly half a million dollars for information leading to Yoo's arrest and detained several family members. Prosecutors said they were still pursuing his son, Yoo Dae-gyun, and would try to seek out the late patriarch's wealth.

"We thought since he had money, he must have been eating well in a warm place," said a 74-year-old who lives near the plum orchard and gave her name only as Ji. "Police didn't know they were chasing a ghost."